Lloyds was 'surprised' by pace of HBOS losses, Sir Victor Blank says

The pace of losses at HBOS came as a surprise, according to Sir Victor Blank, the outgoing chairman of Lloyds Banking Group, who said yesterday his decision to step down was "disappointing but "necessary".

By Angela Monaghan

11:40AM BST 22 Aug 2009

Sir Victor said the group had expected losses at HBOS, after the Government backed a Lloyds takeover to avoid the collapse of the Halifax owner in September, but they came in at "the worst end of expectations".

Diffiicult to credit: Sir Victor Blank said the rescue of HBOS seemed like a wonderful opportunity but that he and other members of Lloyds' management were surprised at the pace of its losses

"What surprised us was the speed at which these losses came in," he said in an interview with theBBC.

Lloyds, which is 43pc owned by the Government, absorbed HBOS in January and a month later revealed that it had made a pre-tax loss of £10.8bn in 2008.

"When we announced the deal in the middle of September, it did not feel like a rescue of HBOS, It felt like a wonderful opportunity that was available and would only have been available in adversity."

Sir Victor said he was "disappointed" rather than frustrated when it became clear that shareholders and UK Financial Investments (UKFI) - the body appointed by the Government to manage its banking stakes - wanted to see changes within the top management at Lloyds.

"[UKFI] and we took soundings from shareholders and it became clear that in order to re-habilitate Lloyds Banking Group as quickly as possible in the eyes of the investor community, it was probably necessary for some change to be made at the top. Fair or unfair...it was necessary.

"I thought the best thing to do was for me to go, not for the chief executive [Eric Daniels] who is absolutely key to the integration going forward."